Cathie Wood Just Went Bargain Hunting: 2 Artificial Intelligence (AI) Chip Stocks She Just Scooped Up (Hint: Nvidia Isn't One of Them)

Ark Invest, led by Cathie Wood, has notably increased its portfolio allocation to semiconductor stocks, making Advanced Micro Devices (AMD) its 11th largest holding after aggressive additions in late April and May, driven by its data center growth and AI accelerator prospects. Concurrently, Ark significantly built out its position in Taiwan Semiconductor Manufacturing (TSMC) during May and June, viewing it as a foundational AI infrastructure play benefiting from overall industry spend despite geopolitical considerations. This strategic shift by Ark highlights a broadened investment focus on core AI enabling technologies beyond its traditional speculative growth holdings.

Analysis

Ark Invest has demonstrated a strategic pivot toward foundational semiconductor stocks, notably increasing its exposure to Advanced Micro Devices (AMD) and Taiwan Semiconductor Manufacturing (TSM). Through aggressive purchasing in the second quarter, including approximately 800,000 shares of AMD between June 17-30 and over 190,000 shares of TSMC in June, Ark has made AMD its 11th largest overall position. AMD's recent 61% share price appreciation since late April is attributed to its accelerating data center business and bullish sentiment surrounding its forthcoming AI accelerators. Despite this momentum, AMD's valuation at 36 times forward earnings and significant competitive pressure from Nvidia present notable headwinds. In contrast, TSMC is positioned as a more fundamental play on the entire AI sector. As the industry's leading fabricator, it stands to benefit from broad AI infrastructure spending regardless of which chip designer prevails. TSMC trades at a more moderate 25 times forward price-to-earnings, with the primary investor concern being geopolitical tensions with China, a risk the article suggests may already be priced into the stock.

Key Decisions for Investors

• Consider Taiwan Semiconductor Manufacturing (TSMC) for broad, long-term exposure to the AI hardware theme, as its foundry model benefits from overall industry growth and its valuation appears reasonable at a 25x forward P/E.
• Exercise caution with Advanced Micro Devices (AMD) in the near term, as its significant 61% rally since late April and intense competition from Nvidia may limit further upside, suggesting investors wait for a more favorable entry point.
• Investors should monitor Ark Invest's trading activity as a signal of institutional sentiment shifts within the AI sector, particularly its increasing allocation to core semiconductor infrastructure over more speculative technology names.
• For positions in TSMC, closely track geopolitical developments related to China, and for AMD, monitor the market adoption and competitive performance of its new AI accelerators against Nvidia's dominant offerings.